Developing Large-Scale Wood Biomass Energy Facilities Challenging

By By Jordan Hemaidan

The use of wood biomass as fuel for energy production is not new. Utilities and other industries have been using a variety of technologies to turn wood waste into energy for decades. By some accounts, there are thousands of wood-fueled projects producing power and heat, largely for industrial applications throughout the world. What is new, however, is a trend toward advanced technology such as wood gasification, and an increase in the scale of wood biomass energy projects for uses such as base-load electric generation.

Three factors appear to be driving this trend. First, as utilities anticipate significant regulation of carbon emissions, increases in state renewable portfolio standards, and the possible creation of a federal renewable portfolio standard, they are prudently planning to get ahead of the game by expanding their generation portfolio beyond current requirements. Second, although they can satisfy most states' renewable portfolio standards with a wide array of renewable technologies, more demanding renewable portfolio standards mean that utilities are become increasingly interested in renewable technologies that provide dispatchable, base-load generation supply, in contrast to intermittent, non-dispatchable resources such as wind and solar energy. Recent experience shows that implementing advanced wood biomass technologies in utility scale applications has its detractors, who are likely to intervene in any local or state approval proceedings to articulate their concerns. Those concerns fall into two general categories-economic and environmental.

On the economic side, the concerns will be that the introduction of a new user of wood resources in the region will have an adverse economic impact on existing users of wood by driving up prices for wood and rendering existing users-such as paper manufacturers and other forest product industry participants-unable to compete effectively in their markets. The answer to this concern is that as long as the new project focuses on using wood waste and not roundwood or tree boles, the economic impact will actually be positive, as wood suppliers will begin to benefit from monetizing the waste materials that normally would be left on the forest floor. Some in the forest product industry may argue that a trend of declining roundwood harvests will mean scarcity of wood waste, which may incentivize large-scale wood biomass users to harvest roundwood for energy production. The answer to this concern is that roundwood not harvested for forest products use should be available for any legitimate purpose, including energy production.

This brings us to the environmental concerns that stakeholders are expressing in opposition to large-scale wood biomass energy projects. These include concerns about over-harvesting, carbon neutrality and soil health. The answer, though not necessarily a panacea, is for developers to be well proactive with an environmentally sustainable fuel procurement plan. Such a plan could include voluntary harvesting guidelines to ensure that sufficient wood waste is left on the forest floor for bioregeneration, and that other environmental concerns are addressed. Another proactive approach is the development of energy plantations that can turn otherwise unproductive land-such as abandoned farmland-into productive new uses, resulting in less pressure on existing forest resources. Other strategies include the development of cooperative organizations to maximize the efficiency of wood waste harvesting and to help ensure a standardized approach to compliance with environmental regulations. As with any other development, the best strategy is to anticipate opponents' concerns, and resolve them in advance.

Jordan Hemaidan, is a partner in the renewable energy group at Michael Best & Friedrich LLP. Reach him at (608) 283-4431 or jjhemaidan@michaelbest.com.